▶ 0:00:11subcommittee on oversight intelligence will come to order. The purpose of this hearing is to examine the development of economic security zones as an economic security architecture. Specifically, we will explore the related issues of governance, critical minerals and infrastructure within the economic architecture. Additionally, we will explore policy options to provide a durable foundation for American economic state craft and ensure the United States possesses the instruments necessary to compete effectively in an era of strategic economic competition.
▶ 0:00:40I now recognize myself for an opening Good afternoon and welcome to today's hearing titled US Economic Security and Investment Abroad: Assessing Economic Security Zones. On behalf of the House Committee on Foreign Affairs and the Subcommittee of Oversight and Intelligence, I welcome our witnesses and I look forward to your testimonies. We are grateful for having you here today and thank you for your time. Today, we know that national security and economic prosperity go hand in hand.
▶ 0:01:11Economic security is national security, particularly when it comes to emerging technologies such as AI and the raw material and critical minerals that support them. The nation that controls advanced manufacturing, critical minerals, semiconductors, artificial intelligence, and resilient supply chains will shape the global economy, and the balance of power for decades to come.
▶ 0:01:32While the People's Republic of China hopes to dominate critical industries and make countries around the world economically dependent upon Beijing, it is the Trump administration that is working with trusted allies and partners to build uh secure supply chains, strengthen private sector investment, and create an economic architecture that advances both American prosperity and American security. At the heart of this effort is the Trump administration's PAC silica initiative. A new vision for American economic leadership based on a simple but powerful principle.
▶ 0:02:03Economic security is national security. PAC silica seeks to build a trusted network of allies and partners that work together to secure the industries and supply chains essential to development of artificial intelligence, critical minerals, energy to semiconductors, advanced manufacturing, logistics and digital infrastructure. Economic security zones are an important part of that strategy. Economic security zones represent an effort to build a trusted network of industrial hubs among America's allies.
▶ 0:02:34Places where investment, manufacturing, logistics, and innovation operate under transparent rules, reliable contract enforcement, and high regulatory standards. Together, these zones can help secure the industries and technologies that America cannot afford to lose. The announcement earlier this year of the first security economic zone in the Philippines marks an important step towards turning that vision into a reality.
▶ 0:02:59It demonstrates how the United States can partner with allies to strengthen supply chains while reducing dependence on authoritarian regimes that use economic coercion as a geopolitical weapon. PAC Silica recognizes that peace and prosperity in the 21st century will increasingly depend on technological leadership, secure digital infrastructure, resilient manufacturing, and trusted economic Economic achievement should not be measured by how much money Washington spends overseas, but whether the investment strengthens
▶ 0:03:29our national security, American businesses, and American innovation. As the United States considers this emerging framework, we also have a responsibility to ensure that economic security zones operate with a strong transparency, accountability, and under the rule of law. We must encourage private investment, protect intellectual property, prevent illicit trade, and ensure that partnerships reflect the high standards expected by the United States and our partners, including both nation state and private investors.
▶ 0:04:00Ultimately, Private President Trump's economic agenda has made clear that America will no longer accept dependence on our adversaries for critical supply chains. Instead, we will lead by building stronger alliances, securing critical industries, and ensuring that the next generation of global economic growth is anchored by freedom, security, and American leadership.
▶ 0:04:23I look forward to hearing from our witnesses about the successes of the economic security zones and the broader PAC silica and how we and President Trump's administration can help advance American economic security. That is why we are having this important conversation today. With that, I will yield to the ranking member for his opening statement.
▶ 0:04:43Uh thank you, Mr. Chairman. Uh and thank you to our witnesses uh for joining us today. I look forward to your opening testimony. uh and thank you to uh the members who decided to be with us. Appreciate it. Uh economic security has become one of the defining challenges uh facing our country. Whether we're talking about critical minerals, manufacturing, infrastructure, or investment, the goal should be simple. Make our supply chains more resilient and make life more affordable for American families.
▶ 0:05:10Unfortunately, most of us look around and see that we're actually moving in the opposite direction. President promised lower costs and said families are facing higher prices. As businesses are dealing with greater uncertainty and markets are reacting to an economic strategy that too often puts politics ahead of sound policy. Economic security isn't just about where our products are coming from. It's about whether working families can afford groceries, gas, housing, and the basic necessities of everyday life. Uh that is why today's discussion about economic security zones is very important.
▶ 0:05:39Uh I agree with the chairman. Uh if Congress is going to consider new tools to strengthen our economy, we need to understand whether they will actually improve America's competitiveness or if they're just a band-aid for other policies that are making our economy less competitive in the first place. One of the biggest headwinds facing American manufacturers and consumers today is the is the administration's tariff policies. Now, I'm not an economic policy expert, but I do know one thing. Tariffs are taxes. They're not absorbed by foreign governments.
▶ 0:06:07They are paid by the American businesses that import goods and then passed on to American consumers who ultimately pay higher prices. And while tariffs can play a targeted role in addressing unfair trade practices or protecting truly strategic industries, broad-based tariffs have imposed significant costs on American manufacturing, farmers, and families while doing little to meaningfully reduce our trade imbalance. Well, we've also seen the consequences in our manufacturing sector.
▶ 0:06:35According to analysis released by the joint economic committee uh Democrats earlier this year, the United States lost roughly 108,000 manufacturing jobs in 2025. An analysis done by the automotive news also shows that section 232 tariffs on automobiles and auto parts have impos imposed more than 35 billion in additional costs through March 2026. And if tariff revenues remain unchanged, it's estimated by the joint economic committee that American families would pay more than 330 billion in tariff costs in 2026.
▶ 0:07:03Uh and that's 330 billion uh with a B. Uh and these costs ripple through the economy making it more expensive to build, manufacture, invest here at home. Um economic security also depends on global stability. Mr. Chairman, you talked about critical minerals and we've we've talked about that at uh a number of our hearings and in the main committee uh is that you know we so far been losing on the battle of critical minerals.
▶ 0:07:31I know this administration is doing what they can to try to turn the tides but you know American the American we've not educated the American people uh enough on why that's so important, what it would mean. Um, and there is bi dramatic bipartisan support which is very hard to find these days up here on dealing with China, dealing with critical minerals.
▶ 0:07:53And another thing dealing with China is China's manipulation of the information Americans are absorbing every day, the propaganda that the Chinese are feeding the American people in order to win the AI race, uh, in order to win uh, the next generation of technology and critical minerals are a huge part of that. In addition, when it comes to supply chain, you know, I I was in charge of the entire COVID response for the state of Florida, as you know.
▶ 0:08:18Um, and I can tell you the supply chain issues we had during COVID that I had buying stuff from all over the country. A lot of it from China, having to fly it in on different planes, uh, we a lot of that has not still been fixed after trillions of dollars were spent at the end of the Biden administration and the beginning of the first Trump administration. all these packages, a lot of the supply chain issues that still existed uh have not been fixed. And so we have to figure out how we are going to onshore uh more of that manufacturing back to the United States.
▶ 0:08:47That doesn't mean we can't live in a global economy. But we we can't depend on foreign nations, specifically nations that are looking to take advantage of us like China, uh on things like critical minerals and critical supplies that are needed uh in the event the United States faces, you know, another uh uh cataclysmic disaster. Uh economic security begins with lowering costs, strengthening resilience here at home.
▶ 0:09:12It means building stronger supply chains, expanding domestic production, uh investing in infrastructure, and creating an environment where businesses have the confidence to invest in America. New economic security zones are being proposed as a way to encourage investment, accelerate permitting, uh reduce unnecessary barrier barriers and concentrate development in strategically important industries. And that effort raises uh serious questions.
▶ 0:09:34You know, will these zones intended to strengthen American supply chains by partnering with trusted allies, or will they be a workaround for domestic policies that are making it harder to invest here at home? Will they generally reduce dependence on adversarial supply chains, which I clearly support, or will they simply shift production from one foreign location uh to another? Uh if the administration is going to promote economic security uh zones abroad, Congress should understand how these initiatives fit into the broader strategy for American competitiveness.
▶ 0:10:02And we should be asking whether these zones will complement domestic investment, reinforce our allies, and deliver real benefits to American workers and consumers, or whether they risk exporting even more opportunity uh while costs continue uh to rise at home. Uh and so, you know, with that, Mr. Chairman, I look forward uh to hearing from our witnesses about what works, what doesn't work, how Congress can promote policies that generally will strengthen our economy, protect our national security, and more importantly, uh lower costs for the American people. And with that, I yield back. Thank you.
▶ 0:10:31I'd like to thank the ranking member for his remarks and also just as he um did make commentary towards me, I want to respond in some ways. I mean, this is why when you talk about Chinese misinformation, I proposed a bill which was called the spin act which would undo the Obama's uh I guess modernization act of 2012 on the Smith Munt Act of 1957 that would prevent propagandized media being not just utilized internationally but domestically.
▶ 0:10:56With regards to rare earth and critical minerals, I think that you and I have had so many discussions about the significant importance of this. And I think that we have to start exploring well beyond what China's goal was, which is just to take the 15 of 16 rare mineral mines in Africa and try and utilize economic coercion, exploitation, and really start looking at things like the 1985 law of the sea where we can do deep seabed harvesting of minerals 250 mi off of our own coast and also look at our bilateral trilateral agreements to be able to try and go ahead and utilize AI semi-autonomous quantum
▶ 0:11:26entanglement drone capabilities to do this and allow us to advance beyond our competitors. But as you said, that is why we have this type of a debate and a discussion, and I look forward to hearing from our witnesses. Other members of the committee are reminded that opening statements may be submitted for the record. This committee recognized the importance of the issues before us. Our witnesses today include Mr. Eric Brimman, the chief executive officer of Prosper International, Mr.
▶ 0:11:53Michael Hollowman II, the chief commercial officer of US Strategic Metals, Mr. Paul Sullivan the president of international business a acro bridge acro
▶ 0:12:04acro bridge and which is an amazing business that helps support our veterans and US steel and Mr. Clark Packard research fellow at the Herbert A stifle uh center for trade and policy studies at the Ko Institute. Mr. Eric Breman the CEO of Prosper International spent nearly a decade building and operating a prototype economic security zone in Honduras. Mr. Mr. Brimman brings extensive knowledge of economic security zones and where improvements can be made. Mr.
▶ 0:12:32Michael Hollowman II, the chief commercial officer of US strategic metals, has over 25 years of experience in global metals markets and is now assisting the efforts to build cobalt and nickel processing capabilities in Missouri. Mr. Holloway can discuss the incentives and risks of private investment and critical mineral Mr.
▶ 0:12:52Paul Sullivan, president of international business at Acro Bridge, leads the company's international business operations for a New Jerseybased bridge manufacturing whose US steel bridges stand in more than 150 countries. Mr. Clark Packard, a research fellow at the Herbert A Stifel Center and KO Institute. Prior to joining the KO Institute, Mr.
▶ 0:13:13Packard was a resident fellow at the R Street Institute and the National Taxpayers Union where I was just awarded the award from the NCU focusing on international trade policy. He previously worked at the National Taxpayers Union doing the same thing. This committee recognized the importance of the issues before us and is grateful to have you here to speak with us today. Your full statements will be made as part of the record and I'll ask each of you to keep your opening remarks to five minutes in order to allow time for member questions.
▶ 0:13:42I now recognize Mr. Brimman for this opening statement.
▶ 0:13:51There we go. Chairman Mills, Ranking Member Moscowitz, and members of the subcommittee. Thank you for the invitation. I would like to share a bit about my background so you understand my perspective and five critical considerations for this committee as you make policy to support economic security and investment abroad. When I was born in Venezuela, it was the richest country in Latin America. And by any measure, people should be amongst the wealthiest in the world today.
▶ 0:14:22Instead, I have seen it turn into a place from which people flee and in which poverty abounds. Since my childhood, I felt the need to understand why and what created the opposite outcome. Why was it that in some places around the world people thrive and prosper while in others they starve and poverty abounds? In 2015, I became a US citizen by choice and I am a pout proud patriot.
▶ 0:14:50My wife and I, Colleen, have raised three kids to be patriots as well. And the answer has been on display for over 250 years right here in the US. What has made America great and the greatest engine of human prosperity is our system of market economy and individual liberty underpinned by rule of law to protect private property. The benefits are not just humanitarian.
▶ 0:15:17Economic prosperity is at the heart of national security and strength. The best of the re-emergent doctrine of American economic statecraft is that it recognizes that the best way to advance US interest at home and abroad is by stimulating greater trade and US strategic investments.
▶ 0:15:37Indeed, doing so stimulates productivity and wealth creation domestically and abroad, and it deepens our ties with However, none of it is possible without the system that underpins a market economy, rule of law, legal stability, and private property rights. In fact, where there is an absence of these conditions, bad actors thrive.
▶ 0:16:02The corrupt, the unscrupulous, and indeed foreign adversaries control the environment and win. In my personal recent experience in Latam, I have seen a country fall to the influence of the PRC, turning from a longlasting and flourishing relationship with Taipei towards Beijing and a series of other foreign adversaries who quickly gained influence and control. These types of regimes predictably have also gone against many US investors, including my company.
▶ 0:16:33So, how can the US best advance economic security and investment abroad? How does the US best support its companies to succeed in foreign markets, especially those of strategic importance to the national interest? Naturally, it's important to understand what stands in the way right now. Why is it that the PRC through SEOs and other mechanisms have been able to gain footholds throughout the world and even become the main trading partner to a majority of nations? Is it because Chinese companies are better?
▶ 0:17:03Is it because they offer cheaper goods alone? No, of course not. It's a game of conditions and the main culprit against greater success is political risk. Under the right conditions, no one can out compete the American entrepreneur and enterprise.
▶ 0:17:21But creating these conditions for market economies to thrive abroad is hard and nearly impossible to sustain through political cycles, especially when adversaries tip the scale of national politics. Trust me, I know far too well given my personal experience. My company has built an enhanced form of special economic zone in Honduras.
▶ 0:17:45This next generation of special economic zone focuses on rule of law, property rights protection, and on improving the lives of the local population. As a result, US investment has flowed.
▶ 0:17:58We represented over 30% of the foreign direct investment into Honduras in 2122 where the greatest source of local jobs that pay higher than average wages have brought new industries and represent a platform of opportunity for strategic US investments in the region. This is why I support the administration's vision to catalyze economic security zones.
▶ 0:18:24This next generation of special economic zones focus on creating the right conditions that can attract US investment and advance interests abroad. In this context, I respectfully want to point out to five considerations when making policy. One, political risk is the one risk that private capital cannot solve for itself.
▶ 0:18:46Number two, American capital flows where operating environment is stable and businessfriendly and the political risk is neutralized. This next generation of special economic zones can solve the issue of corruption and bad governance problems better than any other tool that we currently have. To succeed, these zones must include and support the improvements of the lives of the local citizens.
▶ 0:19:14But critically, for the zones to succeed, Congress must provide the framework and tools that make them durable across longtime horizons and changes of government in the host capital and in Washington DC. Thank you very much.
▶ 0:19:31Thank you, Mr. Hollerman. I now recognize uh or sorry, thank you, Mr. Roman. I now recognize Mr. Hollowman for an opening statement.
▶ 0:19:39Thank you, uh, Chairman Mills. Uh, thank you for your service, sir. Uh, thank you, Ranking Member Moscowitz. Wish you were here. Uh, and members of the subcommittee, thank you for the opportunity to testify today. My name is Mike Holman. I'm chief commercial officer of US strategic metals. I've spent my career around the world working for large commodities trading companies. Um, time in Russia, time in China, time in Africa, Indonesia, Latin America. I've been around the world.
▶ 0:20:07I've watched this cold minerals war simmer without our participation. I've watched the Chinese beat us everywhere we've been. Not because we couldn't do anything about it because we didn't participate in the war that was ongoing. I'm not going to tell you anything here that you don't know, but I just would like to reiterate.
▶ 0:20:28Um, we at US Strategic Metals are building a processing facility on a super fun site to process multi- metallic metals. We're starting with the metals we have in the ground. It's an old mine site, former lead mine that served the military during World War II heavily. Now, we've remediated the site and we're making nickel, cobalt, copper. We have it in the ground, but we're importing through our trading relationships and our technical relationships.
▶ 0:20:57We're building processing so that we can bring feed from everywhere. We have more feed around the world than we need. We do need to mine baby mine. We need to drill baby drill. But do not forget the choke point is process baby process. And I think you know that. Uh I want to open with an uncomfortable truth. The US cannot build a fighter jet, a data center, an EV battery or a smartphone today without materials that flow either directly or indirectly through the PRC.
▶ 0:21:28This is unacceptable. This is also not a matter of pre preference. It is a matter of dependency. One that has hardened into a strategic vulnerability that grows worse every year we fail to act. Just for some context, cobalt, roughly 75% of the world's cobalt is mined in the Democratic Republic of Congo, 75%. A higher percentage of that cobalt is processed in China.
▶ 0:21:57So the Chinese own the mines and they own the processing and they own the battery manufacturing and the alloy manufacturing. So one decision, the US remains one decision away from a Kin Kinshasa or Beijing cutting us off from the ability to have cobalt for super alloys for our jet engines or for our batteries. Uh similar scenarios exist for copper, lithium, nickel, other metals that I I have in my testimony.
▶ 0:22:27I know I've got to get through this. There's so much to say on this, but as you know, um Chairman Mills, rare earth rare earth elements, something we're working on. We're going to be the first recycler of rare earth minerals in the United States. Every advanced fighter, EV motor, precisiong guided munition that we build, passenger cars, common technologies. Your iPhone has 18 ND FEB magnets in it. We get them all. All that material is refined and magnetized in China.
▶ 0:22:56It is unacceptable. So when you take a step back and look at the big picture, America remains reliant on China for 14 of 33 minerals we depend on most. We are 100% import reliant for 13 critical minerals outright and more than 50% reliant for 20 more. So China is the world's leader in refining with an average market share of near 70%. What can we do? The administration is doing great work.
▶ 0:23:24XM, DOW, Energy, Commerce, they're all working hard. The vault, the DLA, we're big fans of what the PACILA that you mentioned, uh, Under Secretary Hellberg, the Philippines, this is a roadmap for the economic security zone. Uh, I think they're doing fantastic work. We just have to follow through and congressional help will be key. We need with these security zones, we need uh durability to make things bankable. They must survive.
▶ 0:23:53You must have political risk insurance that survive administrations both here and there. There should be consequences when governments break the rules. Um we're we're in the Congo right now. You have you have Congalles imports to not imports their exports to China of cobalt which they have now cut off because of Chinese over supply. Well, we need American companies. We have an American mine verdice which is in country.
▶ 0:24:21We have Glenor, my former company that wants to ship all their material to the US. We have to make sure we we work with the government and an economic security zone would be ideal. So you it would survive administrations, survive governments. Anyway, there are a bunch of things that you're proposing. We really appreciate that you follow through on it. The um the the national security threat is exactly what this is. You all know and we we really appreciate you welcome us here to uh talk about it. Thank you.
▶ 0:24:51Thank you, Mr. Alman. I now recognize Mr. Sullivan for an opening statement.
▶ 0:24:56Chairman Mills, Ranking Member Moscowitz, and members of the subcommittee. Thank you for the opportunity to uh appear before you today. My name is Paul Sullivan. I'm the president of international business for Acro Bridge. Acro is headquartered in Precipany, New Jersey with our manufacturing facility in Milton, Pennsylvania. We are the world leader in the design, manufactureer, and supply of modular steel bridges with projects delivered to more than 150 countries across the globe.
▶ 0:25:22We have approximately 350 employees, but our work supports thousands of additional American jobs across steel production, galvanizing, logistics, engineering, and related From our perspective, the subject of this hearing is both timely and practical. Infrastructure is no longer just a development issue. It is a core element of economic security.
▶ 0:25:42Roads, bridges, ports, power systems, and logistics corridors determine how goods move, how communities connect, how supply chains function, and how countries reduce dependence on strategic Economic security zones can be a powerful tool for American economic statecraftraft, but only if they are built on trusted infrastructure, transparent procurement, resilient supply chains, and competitive financing.
▶ 0:26:08A zone cannot succeed if the roads and bridges that connect it are financed or built in ways that create new dependencies, weaken local sovereignty, or reward opaque and non-transparent practices. Acro sees this challenge every day in international markets. American companies often offer better quality, stronger technical compliance, safer designs, and better life cycle value.
▶ 0:26:29But we are frequently competing against foreign firms that arrive with the coordinated backing of their governments, export credit agencies, development finance institutions, diplomatic networks, and political The People's Republic of China has made infrastructure a central instrument of its global strategy. Chinese firms, including state-owned and stateup supported uh enterprises, often compete with subsidized finance, bundled project packages, and diplomatic support that private US companies cannot match on their own.
▶ 0:26:59The challenge is not fair competition. We welcome fair competition. The challenge is competition distorted by tide financing, political pressure, corruption, failure to meet technical specifications, weak quality control, limited skills transfer, and disregard for intellectual property. This problem is not limited to China.
▶ 0:27:20In some markets, European competitors also benefit from highly coordinated national export strategies, export credit uh support, uh development, finance support, and diplomatic advocacy. The broader point is that American firms increasingly compete not only against foreign companies, but against foreign systems. That is why US government support matters.
▶ 0:27:42ACRO uses US government resources in a range of ways to identify partners locally, identify or excuse me, understand local markets, engage with public sector customers, support meetings with high level decision makers, and encourage fair and transparent procurement. US ambassadors, embassy teams, the departments of state and commerce, and commercial diplomacy more broadly can open doors and reinforce that American companies bring quality, accountability, safety, and long-term partnership.
▶ 0:28:12USXM Bank and DFC are also critical. Export finance and development finance can help level the playing field when American companies face competitors backed by aggressive foreign credit systems. But these tools must be coordinated early and must move at the pace of strategic competition. If the United States waits until a tender is issued, the project may already have been shaped by others. Our recommendations are straightforward. First, make infrastructure a core component of economic security zones.
▶ 0:28:42Second, engage earlier in the project life cycle, including feasibility, procurement design, technical specifications, and capacity building. Third, strengthen coordination among the departments of state and commerce, EXOM, DFC, USDA and other US agencies under a whole of government approach. Fourth, ensure that procurement rewards life cycle value, technical integrity, durability, and local capacity uh rather than simply the lowest initial price.
▶ 0:29:12And finally, make sure small and medium-siz American exporters have a meaningful role in this The United States has extraordinary strengths. Worldclass companies, trusted technology, deep capital markets, unmatched diplomatic reach, and a reputation for quality and accountability. But those strengths must be organized for the competitive environment we face today. Strategic competitors are using infrastructure, finance, procurement, and industrial policy to gain influence and lock in dependencies.
▶ 0:29:43The United States must respond with an integrated strategy that aligns American companies, American diplomacy, American finance, and American values, all in support of the American worker. Thank you for your opportunity to testify. I look forward to your questions.
▶ 0:30:02Thank you so much, Mr. Packard. I now recognize you for five minutes.
▶ 0:30:07Great. Chairman Mills, ranking member Moscowitz, and members of the subcommittee. My name is Clark Packard and I thank you for the opportunity to testify. I'm a research fellow at the KO Institute and I've most of my research focuses on US international trade and investment policy with a specific focus towards China. Today, the United States faces genuine economic security challenges.
▶ 0:30:28In 2025, after the Trump administration imposed sweeping tariffs on Chinese goods, Beijing responded with a near total embargo on exports of seven rare earth elements and the magnets made from them. The decision disrupted supply chains uh with semiconductors, defense supply chains almost immediately. Ford Chicago assembly plant shut down for a week due to the shortage of rare earth magnets. This is a very serious vulnerability.
▶ 0:30:57My concern is not with the diagnosis, it is with the treatment. Again, China's dominance over certain critical products is real. Take tungsten used in armor-piercing munitions, certain missiles, aerospace components, semiconductors, etc. China controls about 80% of the global supply chain. The economic security zone in the Philippines is a response to a legitimate problem. Perhaps it will bear fruit, but it should be pursued with other marketoriented tools. Consider where we stand.
▶ 0:31:25National security tariffs on steel and aluminum were doubled to 50% and those tariffs applied to friends and rivals alike. A 10% global tariff now applies to much of what Americans import. Tariffs imposed since 2025 amount to the largest tax increase as a share of the US economy since 1993 at roughly $1,000 per household alone.
▶ 0:31:48Virtually all economic research shows that the Americans are paying for the tariffs, whether at the checkout counter or through higher prices for American manufacturing. Ironically, the tariffs make it more expensive to build everything downstream. More than half of what the United States imports today are intermediate inputs used by American producers. Broad-based tariffs are in effect a tax on manufacturing itself. Likewise, American exporters from farmers to aircraft makers end up paying a stiff price.
▶ 0:32:18In 2025, after the United States imposed those tariffs, American manufacturer shed about 75,000 jobs. The ad hoc and constantly evolving tariffs also create massive uncertainty in the US economy. They undermine uh the predictable and stable conditions necessary for investment to expand. To outco compete China, the US needs trusted allies. Yet, our erratic and costly trade policies have strained relationships with our closest allies.
▶ 0:32:46When we tell NATO members that their steel and aluminum exports threatened American security or treat a Japanese firm's investment in a US steel producer as a security threat, we signal that American commitments are conditional and easily reversed. That is a gift to Beijing, which is happy to present itself as a more reliable economic trading partner. It is not that Korean and Japanese firms are suddenly enamored with China. It's that their export dependent economies have little alternative.
▶ 0:33:15Consider Canada, which is part of our own industrial base and one of the largest suppliers of energy, uranium, and critical minerals. Yet, because of the tariffs and the threat thereof, Ottawa is now openly hedging against the United States, deepening ties with the European Union, and moving to strike a trade deal with China. When a country that helps arm us starts looking for the exits, we have miscalculated badly.
▶ 0:33:37Likewise, for all its flaws, the Trans-Pacific Partnership would have cemented an Americanled trading block to offset China's gravitational pull in the region. Instead, we abandon this potentially game-changing tool. Binding, enforcable, and crucially legally codified trade agreements are how the US should build resilient allied supply chains at scale. Yet, as we raise our barriers, our partners are lowering theirs with one another and excluding us. And the exemptions make the case.
▶ 0:34:06The administration has essentially conceded this point. The US recently lifted tariffs on phosphorus and fertilizer to help lower costs for American farmers. As grocery prices kept crept up, the administration exempted hundreds of food items from its tariffs to help lower prices. And in one area it guards most closely the artificial intelligence buildout. The administration carved out the advanced chips and data center equipment that power American AI.
▶ 0:34:31Each carveout is an admission that protectionist tools raise prices, disrupt supply chains, and undermine the very resilience that they're advertised to provide. If exceptions are necessary, perhaps the rule deserves a second look. Economic security zones may prove helpful, but they should be pursued in conjunction with other market expanding tools. We need policies that affirm market incentives that make American firms and those of our allies more competitive. We need to open doors to friends and allies, not hide behind tariff walls.
▶ 0:35:01I look forward to answering any questions the committee may have. Thank you.
▶ 0:35:05Thank you very much, Mr. Packard. I'd like to thank the witnesses for your opening statements. A lot of great points were made. Mr. Brimman, you talked a lot about political risk, insurance, US capital, local engagement, and making sure policy matches. I think that's great. Mr. Dr. Hollowman made some very strong points and this is just my initial visceral reactions for lack of participation in key areas where China and others are advancing.
▶ 0:35:28Looking at the smelting and processing capabilities here in the United States, 75% of cobalt being in the DRC, which we know China focused on 15 of 16 rare mineral mines within the continent of Africa alone, but also the understanding that reliancy and dependency is unacceptable when you're the world's strongest nation. Uh Mr. Mr. Sullivan made some great points when we talk about the ideas of small and medium-sized businesses being able to advance.
▶ 0:35:52That's why I co-sponsored the Reigns Act, which would actually look at permit reforms and knocking down some of the overregulation that was stifling businesses so we can promote growth. And I think that's a key thing, but also looking at the awards processes because you're right in most international businesses, especially in emerging markets, before that tender has hit the market, it's already been awarded. And we know that relationships are key elements of this. When it came to Mr. Packard, I had quite a few.
▶ 0:36:18I know you're talking about the Nepon Japan 14.4 billion trade that was with US Steel, but we also know that had it not been for President Trump, that not only would America not have the preferential treatment of US steel to come here before any others, but CPHAS would have likely have needed to be utilized where the Biden administration was going to allow that to go through with zero restrictions eliminating US steel capabilities. Canada, with regards to Canada, they would make a great 51st state. I think that they'd be an amazing place and uh I look forward to their governor uh having discussions.
▶ 0:36:47When it comes to agreements, look, the bilateral trilateral agreements, we've looked at AUS and things like that with easing ITAR restrictions for FI partners. I think that'll continue to strengthen things. I understand the fears, the risks, and the uncertainty sometimes of tariffs. But a brief history lesson would point out to 1860 to 1913 where 90% of federal revenue actually originated from tariffs.
▶ 0:37:10And I would argue that outside of Biden's auto pin that in 1913 probably the worst president in American history would have been Woodro Wilson with the 16th and 17th amendment being ratified. Uh essentially stripping out American capabilities but also denying our independence as individual states and individuals as the 10th amendment had rightly afforded for us. That's my visceral reaction to that.
▶ 0:37:35Um, as opposed to uh having my initial uh questioning, I'm going to go ahead and first recognize uh an amazing representative, a true hero to America who served proudly. Uh Jim, I recognize you for five minutes for your line of
▶ 0:37:52Thank you, Mr. Chairman, and thanks for holding and conducting this meeting, and I appreciate all the witnesses being here. Look forward to your comments. You know, um, you know, I think the president has made it clear that the economic security is an essential element to our national security. I think Congress must ensure that the government has the tools and the authorities needed to meet and defeat our adversaries.
▶ 0:38:16And as we've heard from our witnesses, emerging tech is a highly important and and very informative part of our strategy. And so China is is still continuing to push um uh while conducting this kind of diplomacy and the dual use surveillance technology, critical mineral processing, next generation communications infrastructure and joint research initiatives offered as carrots can gain access and leverage over others.
▶ 0:38:44So as part of our effort to strengthen our economic security, we must ensure that our diplomats and foreign service officers have the background needed to science and technology to enhance our economic options. So we should ensure that the embassy staff receive training and have the necessary background to recognize and help the US companies take advantage of economic opportunities which I have introduced HR8212 the technology diplomacy training act as a technology continues to rapidly
▶ 0:39:14evolve. Our diplomatic efforts will depend on understanding how technology priorities connect with other diplomatic and economic efforts. So my question is several of of you panelists you have um you're right on the front lines and you're working on the uh right there where it's critical and so uh some of the things that that's happening with China. So in your experience, here's the question.
▶ 0:39:40In your experience, do you have a greater understanding of STEM fields and emerging technology by embassy staff? Would that be valuable or embassy staff has background in STEM
▶ 0:39:52Uh I would say absolutely and also a clear understanding of of the whole of government opportunities that are available to them.
▶ 0:40:03Yeah, it's definitely important for them to know the technology. So STEM trading w would be important. I think we need a a rounded especially if if they're in country dealing with um with the companies that are working in these countries. We need them to be well-rounded. A lot of times we we go to I just came back from from Kenshasa and we had a a group of people that were very dialed in to what's going on in Congo.
▶ 0:40:32They knew the metals, where the metals went, what they were used for eventually in technology. Um, so I've met both sides and I've been around the world to a bunch of these. So yes, we do. Absolutely, sir.
▶ 0:40:48Uh I think ACRO's position on this certainly would encourage greater STEM training, but I think greater commercial diplomacy uh training in general is very welcome if we're going to implement a whole of government approach where all the various agencies and departments, state commerce, uh uh USDA, XM bank, DFC, if they're all to work in coordination properly, you need uh diplomats who understand the deal cycle.
▶ 0:41:15what it looks like to go into emerging and frontier markets and start from uh the GTG framework of connecting with public sector clients arranging uh the scope of works that will ultimately uh develop a a successful project uh and then provide the financing which in over 90% of the cases is absolutely required. Um I think financing the the training related to financing is also critical for our diplomats.
▶ 0:41:44a lot of them do not have a firm grasp of all of the stages of of the financing milestones with respect to either USX and bank or DFC. And you know from Acro's perspective and in our experience and most of the markets we work in are uh emerging or Frontier uh if you can't bring the financing you're not in the game. Forget about the specs. You're you're not even listened to. Uh and yet the United States finds itself within 6 months of having its export credit agency lapse.
▶ 0:42:14And these are one of those issues that I think we really need to investigate. How not only can we sharpen the tools that these companies are using, but also ensuring that our diplomats have a firm grasp of the ins and outs of the project life cycle. Thank you.
▶ 0:42:32Yeah, I don't I don't have a ton to add. do think that it would be important for, you know, understanding the nexus between the STEM aspects and the technologies themselves and the products used from them.
▶ 0:42:44And Jim, if you got another question, you're free to go over time.
▶ 0:42:48I just I just wanted to appreciate appreciate the comments because I think that's so important because AI is moving so fast right now and and we need to make sure our diplomats understand you got to recognize you got to recognize when you got a positive situation. And so I think that's important that we have that kind of training for the diplomats.
▶ 0:43:05And uh the only other question I have is um uh are there any other areas that we need to support in terms of trying to make sure that we have the financing and the support available for our investors in other countries? Is there anything else that we need to be doing?
▶ 0:43:22Congressman, respectfully, yes. I think by far the most important policy tool that can be created is one that focuses on neutralizing political risk at large. I think everything else is quite secondary to that.
▶ 0:43:37You know, I I know that it uh if you're going to invest in farmland, if you don't have the financial backing, you're kind of in trouble. So that that's an important part of having the funds available. Thank you very much, and I yield back.
▶ 0:43:51Thank you so much. At this time, I'd like to recognize another fellow veteran Marine hero and an amazing guy uh out of Ohio. We'll recognize uh Representative Max Miller for five minutes.
▶ 0:44:02Thank you, Chairman. Truly appreciate it. And thank you, your witnesses, for taking the time out of your busy schedules to come speak with us on this very important topic. Truly appreciate it. It's been refreshing to see an administration take our economic security seriously. Both the State Department and the Department of War deserve high praise for making tangible progress in this area. No doubt we policy makers in the United States obviously should do what we can to secure our supply chains. But in the global economy we now live in it is impossible to onshore everything.
▶ 0:44:31That's where packed silica and economic security zones come in. These are innovative ways to get the United States and our allies on the same page when it comes to our shared supply chain security goals. The Luzon economic corridor is a massive investment that will deliver real prosperity to the people of the Philippines, America, Japan, and others.
▶ 0:44:49It will also serve as a force multiplier for the US and allied forces in the Western Pacific by leveraging significant investments in ship building and aerospace manufacturing from Hyundai and Collins So to any of our witnesses, the Philippines obviously makes sense for an economic security zone like this given our relationship with them and their strategic location. But where else makes sense for future expansion of this model of supply chain resilience that you see throughout the globe?
▶ 0:45:20Yeah, thank you very much, Representative Miller. Appreciate you. Thank you for your service as well. Um, the other places we see are many. Uh currently we're working with uh with Saudi Arabia to do a a copy paste critical minerals processing plant where all of the metal can come back to the United States but it's centrally located near another country Pakistan which has had an increasingly important role and stance toward the United States positive stance.
▶ 0:45:50It's a country that is full of metal, copper, antimony, um, tin, tungsten, many of the metals that we're we're uh, trying to get a hold of in the United States. If you had a nexus between Saudi Arabia, Pakistan, you could do processing in Saudi Arabia. You're it's it's a perfect example of a place where we could go and set something like that up.
▶ 0:46:13Also Congo, Uganda, Zambia, Namibia, a lot of countries in in the central center of Africa have metals that we're building processing for. We currently have a contract with Glenor to take Congalles hydroxide out of the pocket of China and bring it to Missouri, right? Where we're building a plant. So we want to replicate this around the world. Build a national champion. We need multiple critical mineral national champions. I just came back from Panama.
▶ 0:46:41Another great interesting right on our doorstep place where we can get copper, cobalt, a bunch of metals that we need together with a friendly country. That's why ES this this ESZ idea is so important.
▶ 0:46:56Thank you, Mr. Alman. I really appreciate that answer. Sorry.
▶ 0:46:59Yeah. No, I would like to add to that you mentioned Panama and I think it's a a fantastically wellpositioned country right here in the hemisphere. I would say generally speaking, the Western Hemisphere is a is a place where economic security zones are well placed and my most recent experience in Honduras suggests that it's by far perhaps the most underrated and highest potential country in the hemisphere right now if the conditions were right.
▶ 0:47:24So, we're really excited to see how the current administration there has started to shift things more towards a businessfriendly environment and economic security zones there could be
▶ 0:47:33Damn. Thank you. And this really uh kind of goes right into my next question that I have here. Uh given your background, Mr. Hollivan, Mr. Sullivan, uh given your background in metals trading in Africa respectively. I'm very interested to hear your perspective on where you think the economic security zone focused on critical minerals makes sense. We were kind of just diving into that right there with you were saying.
▶ 0:47:52Uh I understand China is deeply involved in this sector in Africa, but cracks are showing and African nations seem that they're wising [clears throat] up to the nefariousness uh that's going on finally um and the Chinese investment within the industry. So I just want to say, you know, thank you for your perspectives on that and anything you could share regarding that um would be great.
▶ 0:48:12Just just one thing on on the back of what we we've been saying. So I I've been in and out of Africa working for Glenor and other trading companies for years. Uh watching the Chinese come in and they think about things differently that it's 25 years and maybe $8 trillion they've been spending on all of this. While we have not been participating, they don't care about a financial return. They care about a strategic return. And this is the the the crux of the issue.
▶ 0:48:41And economic zones is our way. We're not USA incorporated. We cannot function the way they do. It is it's extremely smart. It's also not fair. It is not a level playing field. So, we need to step up and I think this economic security zone is a way to do it. Sorry.
▶ 0:49:01No, just with respect to the critical minerals piece, uh you can't uh draw on critical minerals without supportive industries and sectors like infrastructure. uh and what we have found and we've worked in over 40 countries across Africa is that what African governments are really yearning for is mutually beneficial partnership not exploitative relationships and I think for uh the United States and AcroBridge in particular what is our value proposition it is a race to the top in quality innovation
▶ 0:49:31but also comprehensive partnership and service we are there for the long haul and they know that and they believe that but they're offer often asking where are the Americans? And often times, uh, there aren't many firms that operate in emerging and frontier markets because they're not sure if the tools that they would need to compete in those markets will be available. And as I mentioned earlier, just as one example, USXM Bank is export credit agency.
▶ 0:49:56There are over 85 export credit agencies around the world and each of the countries that we're competing against have very muscular strategies around their export credit agencies, their development finance institutions. And if you're in emerging and frontier markets and you're you're proposing a project and you don't have financing, uh you may be uh may as well be walking in on uh on horseback with bayonets because you don't have a chance. And I think uh from Acro's perspective, we're a we're a small to mediumsiz enterprise.
▶ 0:50:26So we feel that we offer the template on how American companies across uh the industrial heartland can participate in what we believe will be a more expansive partnership across Africa and other parts of emerging and frontier markets. But to do so we've got to have those tools and without those tools which means seasoned skilled diplomats who understand that their job is commercial diplomacy first and foremost helping American companies because what does that do? who it's helping American workers.
▶ 0:50:57And they also have to understand the deal cycle, how things start from preliminary inquiries all the way through to project execution. Um, we do all of those things, but sometimes we have our hands tied behind our back with the lack of these tools. And I can assure you that Acrobid is already, you could say, well, Paul, uh, don't worry, we'll get XM back, uh, we'll get it signed up for another 10 years by the end of the year. But what I can share with you also is that governments are already telling us that the political risk is not us, it's you.
▶ 0:51:28Because we can't depend on the tools that you're bringing to the table and we need these projects executed before we're uh date certain and if you don't have the financing and we can't wait around. So these are some of the real you know we could share anecdotes all day long but the blood and guts of doing international business in these challenging markets whether it's critical minerals infrastructure aggra business the list goes on you need these tools you need the diplomats who really understand them um and we need to make the awareness quotient much
▶ 0:51:58higher out in middle America especially withmemes they feel um you know they don't have giant government affairs departments sitting in Washington DC they run a nice business in middle America, you know, we manufacture in Pennsylvania, uh, but they don't understand how to utilize these tools. So, if there's any uncertainty, they just kind of back away.
▶ 0:52:16And if you're going to get those secondary and tertiary economic benefits from small to mediumsiz enterprise, uh, you really need to raise that level of awareness and sharpen some of these tools that they can that they depend on.
▶ 0:52:29Well, thank you very much. And I truly appreciate the education and it's very necessary, I believe, for our constituents back home to hear the reality of where we are. uh and the education that you gave uh in my about thank you chairman about 8 and a half minutes going on nine so far uh is definitely going to be helpful to the people back home of the seventh district. So thank you very much and I yield back.
▶ 0:52:49Thank you so much. And again both of these gentlemen whether it be Congressman Barrett or Congressman Miller they live in the heartland America. They understand the significant importance of the bluecollar industry. They understand what it is to put jobs and money back into their districts.
▶ 0:53:02And I can tell you that both uh Representative Barrett and Congressman Miller, they fight hard every single day to bring jobs back to their hometowns to make sure that the America first agenda is being promoted, but also to guarantee that we get to a position whereby the economy in America is our peace through strength solution. So I really thank uh Representative Miller for the questions that he's asked. And so um if we want to do a second round, we can. Uh with that, I now recognize myself for five minutes for a series of questions.
▶ 0:53:31How do economic zones, the economic security zones envisioned by the Trump administration compare to the employment economic development zones developed in Honduras and the broader network of free trade zones around the world?
▶ 0:53:46chairman, thank you for the question. In essence, what the economic security zones seek to create are the predictable good governance conditions that American enterprise needs in order to operate effectively abroad. And if they had strong statutory foundations, they would be very similar to the zed that's from Honduras. But they don't yet have that here in the US.
▶ 0:54:09And what are the key similarities and differences and how might they impact international investment in the domestic political support for the zones?
▶ 0:54:18Well, as we have heard, a lot of the foreign adversaries don't compete on a level playing field. What these zones can create in allied countries are conditions in which on the merits American enterprise can compete and win but in any case at least compete fairly structured adequately they would not just be a short-term agreement they would be long-term in nature with consequences attached if their agreements are violated by subsequent administrations.
▶ 0:54:46What this means is that uh capital can flow with a long-term horizon to build infrastructure an industrial base that is of strategic interest and in so doing also benefit the local population
▶ 0:54:59and then kind of in my last as I kind of tether this a little bit um what lessons from the zedes might be incorporated into the development of economic security zones regarding governance and relations with host governments and local populations because I know you talked about local population involve involvement in my trip to Honduras.
▶ 0:55:18Two things really stuck out significantly that the incoming and new Honduran government wants to move away from Chinese adversarial capabilities and move towards Taiwan, which is recognizing about a $2.2 billion fisheries industry and the shrimp capabilities, but also that China has moved in and essentially eliminated the microeconomics of local uh jobs and support that's in the area. Something you see a lot in Africa as well.
▶ 0:55:43Um, so what could we learn from the zedes that we could kind of implement into this new framework of a security economic zone that's coupled with political risk
▶ 0:55:54Yes. Well, what we have seen in a place like Honduras is that there's tremendous potential, but the the conditions of good governance sometimes take longer to build than any given four-year administration. We've been making progress with the current administration, and we're grateful for their support. uh but they have a big mess to untangle that the prior one left um ushered no doubts [snorts] by China and other adversaries. So what we have learned is two things.
▶ 0:56:19On the positive side, when you build the right conditions, capital flows and it develops strategic industries, creates local jobs and deepens the relationship. But if you don't have stability through multiple four-year cycles, then what could happen as it happened in Honduras is that the ch the rules change.
▶ 0:56:40And so while the rules are in place, they work, but if they are not stable, they just don't attract strategic capital and then you create opportunities for places like China to come in. So the key missing element, I would say, are policy tools that make these long-term commitments with immediate consequences if they get violated, not options that take 5 to 10 years through international arbitration, millions and millions of dollars to maybe work out.
▶ 0:57:10This is an irrelevant time frame for political actors that need to get elected every four years. So it has to be immediate, has to be substantial and not to penalize, but to deter to deter because often like the current administration might be very intent in doing the right thing. But once they're gone, the next administration might completely undo it. And this is true in DC as it has been true in Teuzigalpa. And I would venture to say in any other countries that are frontier markets that we have a strategic interest in.
▶ 0:57:39Well, I want to congratulate I mean Honduras under President Tito has done an amazing job to rid itself of what is usually a plaguing problem that only gets out through warfare which is the settlement of communism and they've done an amazing job coming in and actually defeating the Communist Party but also starting to minimalize the impact which China can have to the economy by looking at good strategic partnerships. And again, I cannot impress upon the the importance of strengthening the Western Hemisphere.
▶ 0:58:07If we're going to look at our capabilities and we're going to try and strengthen ourselves, what better place to look at bilateral and trade agreements than in our own hemisphere and in our own backyard. Stronger economic agreements, as we talked about, and economic prosperity is national security. But it also will help us with our issues with illegal immigration. It'll also help us with stopping criminal migrants from crossing our borders because when they have jobs and they have prosperity in their own country, they're not seeking to leave that country to try and seek it elsewhere.
▶ 0:58:37I want to extend that round of questioning out though, if I may, on the ZED to see how you think that we can utilize some of that existing framework to help strengthen what we're trying to build moving forward. So, anyone who would like to comment? So I I I would just say in short terms financing, insurance, diplomacy and infrastructure is the China model, right? They they come in full guns ablazing. The countries behind them, they give them everything.
▶ 0:59:06I've been in meetings where you'll have an infrastructure group or a mining group bid on something in an African country and they'll say, "This is great. We you win. That's the right number, but where's the money?" Oh, well, Bank of China. I've got 10 guys from Bank of China. And then who's going to operate? Well, they're right here as well. You know, they they come as a whole of government approach. We need to look at building a framework where we go in like that. And I don't know how technically it can be done.
▶ 0:59:32I'm a commodities trader, but I like the direction of this conversation and especially this economic security zones. We have tools. XIM doing fantastic work. DFC, I know the the Pentagon is doing a lot of very important interesting things. Um commerce, I don't want to leave anybody out, but they're working on it. the admin is hard at work. I think this is another tool for them. Economic security
▶ 0:59:56Would anyone else like to comment or I can move along?
▶ 0:59:59Just a a quick comment to remind everyone that when we speak in abstract terms about economic power or economic security, we're again uh probably better served by reminding ourselves of the faces behind this. And I think the acro story is is a particularly interesting one. Chairman, as you're aware, our manufacturing facility is in Pennsylvania. Our bridges are made with with 100% US steel.
▶ 1:00:23All of our service technicians are former US military personnel who assembled and installed our bridges in Afghanistan and Iraq. We have a great legacy serving the US military over decades. We've supplied hundreds and hundreds of bridges, not just to the US military, but other militaries allied and beyond around the world. Uh but it all comes down to the workers in New Jersey, Pennsylvania, and a dozen other states who are serving all 50 states across this country.
▶ 1:00:50But when you're talking about working and emerging and frontier markets, there's often this kind of sense that it's distant, it's far. What does it really mean for us? This is again American jobs supporting American families to live the lives that they hope to lead. To do that, you need economic leadership. to do that with your embassies, you need commercial diplomacy that employs or at least fully understands the sharp tools that we actually have. Uh, and we need to scale these.
▶ 1:01:18Uh, it's not just the tools themselves, but it's the uh the federal government employees who serve those institutions at Exom and DFC. It's one thing to authorize, it's another thing to staff so that they can accommodate the deal flow that this administration anticipates and is ready to support. So I I I would only add we have experts here on economic security zones.
▶ 1:01:40I think ACRO's uh position as a steel fabricator of modular steel bridges that serve you know o over 150 countries across the globe. Don't lose sight of the faces all of this is meant to serve which is the American worker and American families. Thank you.
▶ 1:01:56Well, American business, American innovation, American workers are the greatest in the world. and we're great at putting up bridges and as Iran is finding out right now, we're also great at taking down bridges. Uh, with that, I will recognize another great veteran, uh, a ranger, an infantry officer, an amazing guy, and also from the heartland of America, the great state of Ohio. So, I recognize the gentleman from Ohio, Representative Davidson, for 5 minutes.
▶ 1:02:20Yeah, thanks, Chairman. Thank you guys for being here for this hearing, and I apologize for being in and out for part of it um with multitasking here. Um but uh I'm also the chairman of uh the subcommittee for national security and elicit finance which is part of the financial services committee and there's a lot of overlap between what we're working on there and what we're talking about here today in foreign affairs.
▶ 1:02:42Frankly, a number of my colleagues uh like myself are members of both committees and when you look at you know the jurisdiction we're working on the defense production act which goes through treasury but obviously has homeland uh house armed services committee has a big impact commerce has a big impact state department has a big impact um this is a whole of government kind of approach and this this administration has been phenomenal on addressing trade and national security
▶ 1:03:13of our industrial capacity. I think the the concern that some people have had is well, okay, how do we beat China without becoming too much like China? We don't want stateowned enterprises. And so some people have been alarmed with, you know, equity stakes in businesses, for example. And I remember, you know, not long ago, we were having a knockdown dragout fights over just even the export import bank.
▶ 1:03:39And as a former manufacturing guy myself, uh, own manufacturing companies before I came into Congress and after my time in the I I look at it like why would we unilaterally disarm? How are you going to compete in a world market where uh other companies can do trade credit and you can't? Uh because there is a void in terms of what commercial banking can do where they can't cover some risk. And that's the intent.
▶ 1:04:04But I want to highlight one thing here that that uh I want to make sure that all my colleagues uh and and you all are aware of uh is the export import bank created a stockpile uh of critical minerals 60 most critical minerals. They created a 20% uh participation rate by private sector.
▶ 1:04:23So there's a real demand signal on that and it's less prone to politization than um you know the strategic petroleum reserve which you know people argue at times has been or hasn't been whatever but here you've got a clear demand signal at 60 critical minerals and I just wonder you know uh you know maybe Mr. Halman you you you could highlight um the importance of getting things like that for just continuity for American manufacturing and American supply chains. Sure.
▶ 1:04:52Thank and thank you for the question and thank you for your service also, Representative Davidson. Um, this is an issue we we've been banging on about for years and we're so pleased to see that Chairman Jovanovich and XM have have gone forward with the vault. The vault is a fantastic concept. The Chinese have been doing it for years. I as a commodity trader for years would watch the Chinese overproduce, bury the price of a commodity, you name it.
▶ 1:05:21Maybe it was an American company or a Swiss trading company trying to buy a mine. They would bury the price to make it uneconomical. And when the price hit rock bottom, they would buy all of the global stockpiles of the metal. This just happened with cobalt. Last year, there was an over supply of cobalt. Cobalt went down to $11 a pound. 14,000 tons was sitting in the stockpile in Roderdam. They bought it all. Right? That that's thinking like a trader, but you're a country. Well, this is what the vault is going to do.
▶ 1:05:50If you want to dump, we're buyers, right? The American vault are the buyers. And then we can give that benefit back to the US companies and to the US taxpayer. I think it's a fantastic strategy. They're working on it. We're coordinating with them. But this is a a really good physical step, an actual step that's being done by the admin and I applaud
▶ 1:06:12Yeah, that's a perfect illustration and thank you. That's exactly what happens is they make it so there is no price discovery and part of the whole point of markets is that you can discover a price and aside from that, this is where defense production act kicks in. For some um critical minerals, rare earth minerals, there's no way to do price discovery because 100% of the processing is in China. So there is no market price. The price is whatever China sets the price at.
▶ 1:06:37If you want to raise capital for that, you can't really be a true fiduciary and commit to repay debt u because you can't really tell what the market price is. And so this leaves companies that want to produce it in America in a void. For a long time, the void has been filled with with grant making. The federal dollars just go in grants. And the shest thing is just a little ways down the road, they need another grant, right?
▶ 1:07:03So there's there's no fierce accountability from a venture capital or private equity coming in and providing staking for it. And there there's uh there's no way for the capital formation to take place. So this is where the equity stake comes in uh so that they get the capital, but they also have the feet to the fire to deliver the production capacity. That's the case being made for the defense production act. And you know, Mr. Sullivan, you've worked in both of those worlds.
▶ 1:07:30uh could you give us some thoughts on how this interacts uh you know with with the US effort for you know both more domestic production with the defense production act uh incentive but also what we're talking about maybe broadly is in some places like the Philippines for example you might be able to do that in a friendly third country where you have a close relationship and strong defense partnerships with and and steer some of that investment there without going full defense production act. uh could you share your thoughts on
▶ 1:08:01Yeah, I mean Acro Bridge is not expert in the Defense Production Act, but we do make a bridge that serves military purposes, whether it be line of communication or or or other military applications, uh emergency uh response bridging, you know, for military career, you would know that our bridges uh are are are drawn from the old World War II Bailey Bridge. This is a 21st century modern iteration. Our soldiers are trained to build a 51 meter acro bridge within 24 hours by hand.
▶ 1:08:31It's an extraordinary technology. The all these components fit within 40ft high cubes. They're distributed all around the world and installed immediately. So the rapid mobilization, the high quality, all of those things. I'm getting to this point which is supply chains. So one could argue that okay well you know do we need X and Bank? Do we need the Defense Production Act? Why aren't we allowing the invisible hand? I've we've heard those arguments. The fact is is we need US government support.
▶ 1:08:55We need congressional support to uh help us compete on a level playing field with uh competitors out of China, Europe, and beyond. Uh and if we can't, those uh capacities will shrivel within our own economy and you will need them at a certain point in time.
▶ 1:09:12uh to remove these tools, whether it be XM Bank or some of the other uh items of the Defense Production Act that you think will help uh uh American firms uh stay nimble and innovative and and and secure economically. Um if you don't have those tools, it's akin to running into battle and leaving all your tools on the nightstand. It doesn't matter once you're out there. Uh and that's what we're finding when we're in these markets.
▶ 1:09:37we are literally being told we'd love to work with you but you're within six months of lapse.
▶ 1:09:44Yeah. Yeah. And so the funding authorities are are a big challenge there. And look that's what happens. That's usually one of the shortcomings of uh central planning like what why historically the American market has outperformed uh you know government driven economies. And I think that's why we need to, you know, make sure that we don't become uh China in our effort to counter China and we keep the private sector demand signal.
▶ 1:10:07I I applaud applaud chairman Yvanovich for doing that at XM and we are working to kind of how do we put parameters around defense production act as we do that. I think when you look at friendly countries that we can do uh these uh you know capital formation zones in and get critical supply chains for friendly countries that we you know feel that are defensible. Um you're looking at de-risking the supply chain.
▶ 1:10:31You the last thing I think one of the areas that we've been able to stay zero tariffs on uh is is a aviation and aerospace. So you know obviously Airbus they sell a lot of planes so does Boeing. Uh you know GE in Cincinnati, Ohio makes a lot of engines.
▶ 1:10:45uh but there are other engine makers around the world and you know China wants to compete in that space there we've had zero tariffs and when we have zero tariffs when we do have a level playing field we outperform everybody uh our our our companies in our country outperforms but what happens is you know as Mr. Holman, you highlighted uh if you let China go unchecked. Well, they do steal the market. They they they shape it and they're essentially buying the market. There is no market.
▶ 1:11:15This is like watching boxing when one guy can hug and clench and the other guy can't. Uh that's why the referee has to break it up and make them fight. And I look, I think the Trump administration's finally finally addressing what Ross Perau saw and frankly most everybody else was wrong about. There was a giant sucking sound.
▶ 1:11:32uh and what because you weren't fighting on equal footing and you know China promised to be on equal footing when they committed to be part of the world trade organization and for a long time our state department our commerce department our US trade representatives have done nothing about it so thank you for highlighting that today chairman thanks for having this hearing and I
▶ 1:11:50thank you so much I really appreciate and great line of questioning and thank you for the answers that was provided if you'll indulge me for a moment I want to ask get to a couple more things um how could the United States own free trade zone program. Uh the US foreign trade zone program fit into the Trump administration's economic security zone network to support US manufacturing and supply chain initiatives like PACIA. Any thoughts on it please?
▶ 1:12:19Yeah, I mean taking out the specifics of these economic security zones, I do think that that historically we have used free trade agreements to raise standards in foreign countries. Other countries want desperately want access to the US market and take the Peru the the old Peru FTA. Um the goal behind that was not to lower tariffs and export more.
▶ 1:12:45I mean all those were fine side effects but it was to get the Peru government to create the in uh the sort of um conditions that's welcoming of investment. So the the point I would always make is that FTAs are going to be more stable because they're codified into law. They're not sort of done on an ad hoc basis.
▶ 1:13:06Um and you know I I just think that that's the tool again not with not with respect to to the economic zones but just generally using FTAs for that purpose I think is is a noble goal and the US has a history of succeeding with that. You can take the China you know joining the WTO out but but take that again take that out the US has not all these agreements are are as bad as people seem to think they are.
▶ 1:13:35In fact, they're they provide lots of benefits.
▶ 1:13:38Yeah. And if I could build on that, uh the foreign trade agreements um the free trade agreements, they are really powerful legal tools. Okay. And um what they haven't been used for yet is to serve as anchors for this type of special economic zones because as I have seen and I think we all agree here if there's no stability in these foreign markets you can and level playing fields you can't compete. Okay.
▶ 1:14:07So you can make up for the lack of competitiveness through all sorts of other tools and maybe that has a place but the ultimate objective is to unleash the American entrepreneur abroad and for that you need the right conditions and so you can do that at a nation state level and it won't work. We've seen it through Washington consensus or you can support these economic security zones but the question is how do you make those stable?
▶ 1:14:34How do you give them the weight of not just US law, not just domestic law, but international law? And that is where these free trade agreements can play a significant role. Imagine a situation where the US were to offer in essence a free trade agreement with an open invitation for other countries that wanted these economic security zones within their territory to ascend into.
▶ 1:15:00All of the sudden what they would have been doing is they would upgrade the stability of those zones to international law standards. And if the terms of the agreement are such where the US government stands fully behind the stability of set agreement, I think you solve the problem at the root which is the political risk and you do that through political risk insurance. And Mr. Mr. Bman, if I may, just sticking with you really quickly.
▶ 1:15:25Um, what types of support has Prosper sought from the US government and what, if any, support has Prosper received?
▶ 1:15:35Um, [clears throat] the most important
▶ 1:15:37feel free to be very candid.
▶ 1:15:38Sure. Well, um, you know, as you know, we're engaged in international arbitration, so there's some of this that it's a bit delicate because of that. It's as if you were in active litigation. Um, but the the most important thing that the US can do is just unapologetically stand for US investments abroad, especially when they know full well that they're legitimate, that they're advancing strategic interests and to not, you know,
▶ 1:16:09to say things how they are, to be straightforward and and for that to not depend on who's on the White House at any given point in time. And that's why I think that a a congressionally created policy framework is important so that it isn't so variable from one administration to the next.
▶ 1:16:27Creating the conditions and then standing for the American enterprise abroad is is super and for everybody that's here and I I I saw you shaking your head and I know that you talked about this vehemently about the fact that uh whether it's the business consulate sector or whatever that there should be more involvement and there should be more advocacy and I can tell you that from my time in working around various uh embassies I remember when I was in Iraq working at the US embassy there I watched the
▶ 1:16:57British embassy go to bat and truly advocate for British businesses far beyond what I saw with American American diplomats. Even so much so that some of our own core breadandbut contracts for industry that should have gone to us went to the UK because of the intense advocacy that was given uh within that actual sector. And so I know the significant role and importance and the strength and the power that these embassies can yield.
▶ 1:17:25The problem I see is that there isn't any power being yielded by the Americans and there's tremendous power being utilized by our competitors and other adversaries. Uh would you like to comment on that Mr.
▶ 1:17:36Sure. you know at any given year uh ACRO's revenue is derived uh anywhere between 50 to 90% in international markets and I would say that 90% of our work in international markets uh are coming out of emerging or frontier uh markets where uh everything is built around government-togovernment relationships. So, you know, if you're talking with anyone in the embassies about how projects are advancing, it's, you know, what is the bilateral relationship? What's the GTOG?
▶ 1:18:06Uh, and part of that is also because financing is so important and you can't have export credit agency or development finance uh funding without having uh some kind of um sovereign backing. So uh when we succeed in these markets, we are very pleased to uh endorse the efforts of some of our finest civil servants who are our political econ officers, our ambassadors, our charges, the affairs, our uh commercial service officers.
▶ 1:18:35Some of them are just extraordinary. But the point that was made earlier about um our foreign service officers should be um uh supporting US business, I I think that's too soft. Frankly, I'll go back to this and I don't want to sound too demanding, but it's their job. And I think this administration has been very clear in saying that diplomats are to lead in commercial diplomacy.
▶ 1:19:01Move forward, support American companies, support American jobs. We have seen it uh across the world in supporting Acro's business which supports our factory in Pennsylvania. Uh however to your point uh the commitment to that u is uneven. It varies from embassy to embassy, individual to individual. Some folks join the foreign service with different motives in mind.
▶ 1:19:27uh others have embraced this turn that's about a decade long of commercial diplomacy and moving American business forward which keeps coming back to the point that you raised in your remarks at the top of the program here which are uh economic security is national security. So the idea that this is just some business that's topping off coffers for for American companies uh it's much bigger than that and that's what uh uh uh diplomats should understand.
▶ 1:19:55Uh and if they're not interested in that they probably shouldn't be diplomats.
▶ 1:19:59And Mr. Packard, I had a question. I want to get your insight on, you know, how would you envision the US government and host countries plans to uh provide oversight for these economic security zones to prevent illicit trade
▶ 1:20:14Yeah, that that's a really good question. I know I believe just yesterday the DOJ brought up a uh trade fraud case. Um I I would say that trade enforcement is extremely important, right? Like I'm a committed free trader. Uh but I also understand the need for for enforcement um and whether that entails you know beefing up um you know customs officials to to do more screening using enhanced technology. Trade fraud really is is a problem.
▶ 1:20:44I one of the things I would say is part of the reason it has expanded is because US tariffs when we make when we put in tariff barriers, people are still going to try to buy those goods and they're looking for ways to circumscribe or or excuse me uh skirt past the the tariff wall. Uh you see that with trans shshipment and and all kinds of you know in all kinds of areas of trade.
▶ 1:21:08Um, and so, you know, I think there's more that the US can do on the enforcement side, solidifying that piece, but also working to coordinate and and uh bring allies in closer. Right? If you go back to the '9s, Mexico was drifting in a very leftward way toward the failed socialism of Latin America.
▶ 1:21:30The Clinton administration made the wise decision to expand the US Canada FTA by bringing Mexico in as a way to push to push back against really troubling economics and policies that that could have come right up against our border.
▶ 1:21:48So thinking about using trade in strategic ways like that, FTAs, using them, you know, all kinds of tools, but definitely using FTAs to to kind of push uh these things forward and and again, you you you cultivate better relations with with allies who are going to be more willing to, you know, concede on certain things and and cooperate.
▶ 1:22:11Um and and I just think that that the current system is is pushing those very countries we need away from the US orbit. Thank you. And then I I think Mr. Holland and Mr. you might be kind of the best positioned on this given uh your experience and where you're at. Could you define for us so that people can understand especially those uh who end up reading this hearing?
▶ 1:22:35Could you define a logistic corridor and how it would operate in the context of a proposed kind of network economic security zone?
▶ 1:22:44Sure. I I think a great um example of that would be the lobido corridor that goes into Angola from the the Great River region Congo area. So a logistics corridor is anywhere you're taking the first principle fundamental material which we all want to talk about the enduse product the battery the computer but how does it get there? It's got to come out of the ground somewhere in the world.
▶ 1:23:10It has to get first mined then processed originally either an ore or a concentrate loaded into trucks taken to a port or to a train station. Um, and right now, you know, Africa, amazing, amazing, super rich country. It should be overflowing with abundance and jobs for the for the people of Africa. And it it is so split up. There's not a good east-west corridor right now.
▶ 1:23:36If we were to do an economic security zone that included Rwanda, Burundi, DRC and the Loito corridor, you would have from Dora Salam to libito east west corridor rail which would really open up the African continent to all of these these logistics from either place. You can load things into vessels.
▶ 1:23:58We specifically will use New Orleans um for barge reloading or train reloading up to our site in Missouri, our multi metallic site. Um we have, you know, a super fun site. We're environmentalists at heart, but we need to bring these people the these metals back and you can bring them from all over the world, but you must have consistent logistics. right now to go from Congo to China where most of the material goes.
▶ 1:24:26It's a 54-day truck ride down to Durban, South Africa. You don't have many other options. Uh America needs to get in the game. We need to step up the game at the first principles level and build our processing in America. And I think this economic security zone, the the Busan uh initiative is a really good one. I think that's a great way to um to do it for the United States.
▶ 1:24:53Uh chairman, if I might add to this because I'm so surprised the libito corridor was raised. Uh ACRO is currently supplying 186 bridges to Angola and this is an example of where a US initiative has its primary first principles objectives but it ends up crowding in all kinds of other projects because the uh host government is is ultimately suggesting well hey we don't simply want this.
▶ 1:25:16We want a a transformative development agenda and we want your innovation, your quality, your long-term partnership, your service. Uh, and Acro has built this um 186 bridge project around uh the atmospherics if you will that were created by the momentum of the Lubito corridor.
▶ 1:25:35So the all the things that you mentioned uh Michael but in addition uh there are all these other companies that ultimately participate because it creates kind of a bilateral sense of good feeling and encouragement and trust and uh you know uh I could see uh without being an expert in economic security zones but anytime there's this kind of bilateral coordination this creates the opportunity for other American companies to assert their value proposition and in a mutually beneficial way which is distinct from other models that
▶ 1:26:05we've discussed prior
▶ 1:26:07and the countries are asking for it. You know that that's the proof that it is it is there. They they have seen the Chinese model. They're sick of it. They want African jobs for Africans. They don't want a Chinese city coming in everywhere they're building or mining or operating, right? And and Americans will work that way. This is the thing that we've seen in all the countries that China makes a tremendous amount of
▶ 1:26:30But what they do is they bring in their own workers to try and boost their own economy and boost their own capabilities. They also promise the stars and deliver the clouds when they come and say, "We're going to build this new city. We're going to build this new energy terminal, this capability, this capacity." when in reality what they're doing is they're preying upon countries that are in poverty that are naturally resourcerich so they can then utilize those resources to try and advance themselves which is why they'll utilize economic coercion as they did in Panama and Honduras originally which is why they were
▶ 1:27:00going after Africa as a key target for rare earth minerals and critical minerals exploitations uh and what you see right now the second largest population of Chinese outside of China is where in Durban South Africa and so we know exactly what China's tools are and the better part of that we know the quality of American goods and that's something that nobody else can compete with an in the world is our innovation our capabilities our capacities and our quality but we only are going to be able to advance ourselves if we put
▶ 1:27:31ourselves at the table and too far and too many times we are not participants in the discussion uh Mr. back.
▶ 1:27:37Yeah. Just real real quick. I I mean the the Trump administration first term uh opened up FTA negotiations with Kenya and the Biden administration backed away from that. That would be that would be a tremendous first step. The US is not offering any country in in Africa any kind of binding deal like an FTA. And again, Ambassador Lighheiser understood that.
▶ 1:28:02And I think, you know, beyond the economics, it sets a precedent and then you can kind of build from there. But the US has to get off the sidelines. It's been 14 years since the United States did a new trade agreement with uh with a new country other than renegotiating the USMCA. Other countries continue to move on. The Biden administration said trade agreements are tools of the 20th century. That's that may be the case in the US, but it's not the case in the rest of the world.
▶ 1:28:30I would agree with that. I want to be clear that in this subcommittee, we invited all of our Republican and Democrat colleagues. And unfortunately, only as you witnessed, our Republican colleagues showed up because they care about advancing in ensuring that we have security economic zones, that we have advancement in economics, that we're looking at bilateral agreements, that we understand that a strong economy means security, stability, and also national security. But I'm going to afford them a slight bit more time.
▶ 1:28:57So, what I'm going to do is I'm going to take a quick 10-minute break so that everyone can go get coffee, water, utilize the restroom, etc. We'll come back. If none of our colleagues have shown up, then at that point, we'll go ahead and come in for our closing statements. So, with that, we're adjourned for the next 10 minutes.
▶ 1:39:46The committee will come to order. Before I opening the closing or I provide my closing statements, I wanted to just touch on something because you mentioned Mr. Breman about and I don't want to put you in a position knowing how uh tenuous things are with regards to arbitration and things that you can be said here can be utilized in a litigative manner. But I want to point out something. You know, in response to the Honduran National Congress's April 2022 unanimous decision.
▶ 1:40:15They repealed the employment and economic development zone enabling legislation for Prosper, which is a Delaware uh incorporated company. had major investment in there, filed your arbitration for alleging about 11 billion in overall damages before the international center for settlement of investment disputes. Prosper, you've obviously alleged the violation, which is rightfully so, under chapter 10 of the Dominican Republic central uh America free trade agreement.
▶ 1:40:43And I also just want to point out the fact that you know the department of state in Washington and the Guusapa meet regularly with both parties to encourage both sides to resolve this impass. Uh the department has raised this and other commercial and investment disputes and meetings with uh President Asura uh and his team since January of 2026 inauguration.
▶ 1:41:06Uh this ongoing dispute remains an irritant and is a is raised regularly, but the US government and the private sector hopefully are looking towards the new Honduran government being able to resolve and get a promising response to this concern. But please keep us up to date on what the outcome is with regards to this arbitration, how the US government is continuing to engage with the newly formed government.
▶ 1:41:31But at the end of the day, these types of violations and arbitration should be dealt with rapidly. And drawing this out administration after administration after administration, knowing the monetary damages which were incurred as a result of violating these economic agreements is something that I hope that you'll keep our committee a breast of and also allow us, if need be, to hold further hearings, launch investigations, and also see how we can get resolution in this.
▶ 1:42:00So, I hope that you'll keep us updated and uh again, I won't ask you to comment necessarily because I know that's a very tricky situation, but I want you to know that we're aware of it and that as an American company, we will continue to advocate and look for resolution on this arbitration. Um, it is very important to us. Flip to my script. I thank the witnesses for your valuable test valuable testimony and the members that were here for their questions.
▶ 1:42:30The members of our subcommittee may have some additional questions for the witnesses and we will ask you to respond with these in writing. Pursuant to committee rules, all members may have 5 days to submit their statements, questions, and extraneous materials for record subject to the length and limitations. If there's nothing further, without objection, the committee stands